Labour again grabbed the headlines on day two of the campaign with its big bang student allowance announcement, leaving National to question how much it would cost.

Prime Minister Helen Clark told cheering students at Otago University a universal allowance would be phased in by 2012, costing the Government $210 million.

In 2005 Labour snapped up student votes by scrapping interest on student loans, this time the party is going for another hit with a universal allowance.

Monday’s action followed Miss Clark’s announcement on Tuesday of a bank deposit guarantee scheme, which was picked up by four of the big banks.

National’s leader, John Key, said the universal student allowance was “an interesting idea” but he wanted to know how it was going to be paid for.

He suggested Labour would drop the next phase of its tax cuts, which Clark said was rubbish.

National’s deputy leader, Bill English, also said Clark needed to explain how the universal allowance was going to be paid for.

“Helen Clark has decided she is going to spend her way to the election,” he said.

The economy continued to have a big role in the campaign, and Clark said the international financial crisis was giving people “pause for thought” about who they trusted to run the country.

“That’s going to be the fundamental issue that drives this campaign — in a time of crisis who has the judgment, skills and experience to take New Zealand forward.”

In other campaign developments:

  • National said it would put $47 million into boosting literacy and numeracy in schools, part of an education “crusade” it is promising. Education Minister Chris Carter said the announcement was nothing more than empty slogans and the programmes already existed;

  • English said Labour was making big-spending promises without explaining how they would be paid for and had given itself a way out by planning a mini-budget in December that could change everything;

  • New Zealand First leader Winston Peters told an audience of old folk in Paeroa they would be the first to be hit when the economy turned sour. He lashed National for cutting super the last time it was in office and said there would be “consequences” if they were elected this time;
  • Labour MP David Benson-Pope confirmed he would not be standing in the election. He lost the Labour nomination for the Dunedin South seat he holds and there had been speculation he would run as an independent;

  • Reserve Bank governor Alan Bollard briefed Mr Key on the bank deposit guarantee scheme and after their meeting National’s leader said he was comfortable with the broad thrust of it.

He said he should have been briefed in advance, and accused the Government of deliberately shutting him out. Finance Minister Michael Cullen said Key was playing politics. Clark said Key had been sleeping on the job and should have known it was going to happen.

NZPA